Shital Piyushkumar Patel Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that benefit of deduction under section 54EC of the Income Tax Act allowed since nexus between advance received towards sale of property and investment made in NHAI bonds established.
Facts- During the assessment proceedings under Section 143(3) of the Act, it was observed that a portion of the property was sold on August 16, 2008, with the possession handed over to multiple parties. The total sale consideration claimed for this transaction was ₹8,25,00,000/-, which as per AO lacked documentary support or justification on part of the assessees.
Notably, primary issue under the present appeal is the admissibility of a deduction claimed u/s. 54EC for an investment of ₹50,00,000/- in bonds of the National Highway Authority of India (NHAI). AO initially allowed this deduction in the assessment order. However, upon reviewing the circumstances, the CIT noted that the investment was made on June 25, 2008, with a deemed allotment date of July 31, 2008. As the transfer of the property occurred at a later date on August 16, 2008, and the CIT(A) found the investment to have been made prior to the date of property transfer, CIT(Appeals) was of the view that the stipulated conditions of Section 54EC of the Act have been violated.
